HEALTHCARE IT INDUSTRY UPDATE JUNE

Transcription

1 INDUSTRY UPDATE JUNE Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.

2 HEALTHCARE IT PRACTICE OVERVIEW INTRODUCTION Harris Williams & Co. is pleased to present our Healthcare IT Industry Update for June This report provides commentary and analysis on current capital market trends and merger and acquisition dynamics within the Healthcare IT industry. We hope you find this edition helpful and encourage you to contact us directly if you would like to discuss our perspective on current industry trends and M&A opportunities or our relevant industry experience. CONTENTS WHAT WE RE READING KEY HEALTHCARE MACRO INDICATORS PUBLIC MARKETS PUBLIC COMPARABLES M&A ACTIVITY PRIVATE PLACEMENT ACTIVITY IPO ACTIVITY OUR PRACTICE Harris Williams & Co. is a leading advisor to the Healthcare IT industry. Our global practice includes professionals across the firm from Harris Williams & Co. s Technology, Media & Telecom Group and Healthcare & Life Sciences Group. CARE DELIVERY ORGANIZATIONS INSURERS PATIENTS HW&Co. Healthcare IT Taxonomy CLINICIANS EMPLOYERS HW&CO. Healthcare IT Market Map Please contact HW&Co. for proprietary detailed HCIT market map Patient-Facing Solutions Care Delivery: Operational Efficiency Care Delivery: Clinical / Acute Care Delivery: Clinical / Non-Acute Care Delivery: Clinical / Post-Acute Pharma & Devices Revenue Cycle Management Population Health & Risk Management CONTACTS Sam Hendler [email protected] +1 (617) Jeff Bistrong [email protected] +1 (617) Mike Wilkins [email protected] +1 (415) Thierry Monjauze [email protected] Turner Bedrup [email protected] +1 (804) Cheairs Porter [email protected] +1 (804) James Clark [email protected] +1 (804) Geoffrey Smith [email protected] +1 (804) Dan Linsalata Vice President [email protected] +1 (617) PAGE 1

3 WHAT WE RE READING HOSPITALS NEED TO SPEND BIG FOR VALUE-BASED CARE EVEN WHILE PROFITS ARE EXPECTED TO DROP Healthcare IT News 6/24/2016 Value-based contracts will hurt profits despite being viewed by many as an important way to contain healthcare costs, a poll of almost 300 healthcare executives conducted by KPMG found. Nonetheless, providers are going to have to institute new technologies to get there. [Healthcare companies] need to arm themselves with analytics to make the case that value and quality are being delivered in patient care and to compete more effectively in their respective markets, Dion Sheidy, KPMG s Advisory Healthcare Leader, said in a statement. Read the full article here. MINNESOTA S LARGEST HEALTH INSURER WILL DROP INDIVIDUAL PLANS HEALTH INC. 6/24/2016 Blue Cross and Blue Shield of Minnesota will retreat from the sale of health plans to individuals and families in the state starting next year. The insurer, Minnesota's largest, said extraordinary financial losses drove the decision. "Based on current medical claim trends, Blue Cross is projecting a total loss of more than $500 million in the individual [health plan] segment over three years," the insurer said in an ed statement. Read the full article here. EMPLOYERS CUT DOWN ON WELLNESS BENEFITS The Wall Street Journal 6/20/2016 In the past few years, workplace wellness programs like health coaching were hot. Now they are not. A big new survey of benefits from the Society for Human Resource Management found that employers are cooling toward certain wellness benefits. Originally designed to cut employers health costs, benefits like on-site flu shots, 24-hour nurse hot lines, health coaching and insurance-premium discounts for weight loss all have declined over the past year, the study found. As employers begin to analyze return-on-investment and participation data, they may be taking a step back, said Evren Esen, director of survey programs at SHRM, the world s largest society for human-resources professionals. Read the full article here. 7 OF 10 MOST PROFITABLE US HOSPITALS ARE NONPROFITS The Associated Press 5/2/2016 Seven of the 10 most profitable U.S. hospitals are nonprofits, according to new research, including one in Urbana, Illinois, where hospital tax exemptions are headed for a contentious court battle that soon could determine whether medical facilities are paying their fair share of taxes. The "Top 10" list accompanies a study published Monday in the journal Health Affairs. The analysis is based on federal data from 2013 on nearly 3,000 hospitals. The authors measured profits using net income from patient care services, disregarding other income such as investments, donations and tuition. Researchers say the measure reflects how hospitals fare from their core work, without income from other activities. Read the full article here. RETURN OF ANNUAL UPDATES TO ICD-10 CODE SET BEGIN OCT. 1 EHR Intelligence 3/15/2016 At a recent meeting of the ICD-10 Coordination & Maintenance Committee, the Centers for Medicare & Medicaid Services unveiled plans for implementing the first updates to the ICD-10 code set. Last week's meeting was the first since the ICD-10 implementation deadline on October 1, which ICD-10 Coordination and Maintenance Committee Co-Chair labeled a success. "We're so pleased to report that no sky fell and there were no major issues. We had no big billing problems. And life is good," she said to kick off the two-day public forum in Baltimore to discuss proposed code changes to ICD-10 codes. Read the full article here. PAGE 2

4 KEY HEALTHCARE MACRO INDICATORS U.S. HEALTHCARE SPENDING ($ in trillions) U.S. AGING POPULATION (percent age 65 and older) $6.0 $5.0 $4.0 $3.0 National Health Expenditures HC Expediture as % of GDP 20.0% 19.0% 18.0% 16.1% 19.3% 20.0% 20.2% $2.0 $ % 12.6% 12.4% 13.0% - '08 '10 '12 '14 '16P '18P '20P '22P '24P 16.0% P 2030P 2040P 2050P HIGH-DEDUCTIBLE HEALTH PLAN ENROLLMENT (enrolled lives in millions) PRIMARY CARE SUPPLY (number of physicians in thousands) Total Physicians (in 000s) % Independent % % % 33% '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '00 '05 '13 '16E U.S. EMR ADOPTION - HOSPITAL (percent adoption by EMRAM stage) Stage 0 Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 U.S. EMR ADOPTION - AMBULATORY (percent adoption by EMRAM stage) Stage 0 Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 '07 '08 '09 '10 '11 '12 '13 '14 '15 '12 '13* '14 '15 *represents Q data (2013 year-end data unavailable) PAGE 3

5 PUBLIC MARKETS MEDIAN REVENUE GROWTH ( ) MEDIAN REVENUE GROWTH ( E) Clinical / Administrative 13.4% Clinical / Administrative 14.0% Payer-Focused 6.7% Payer-Focused 10.5% Pharma 17.3% Pharma 3.5% Consumer Healthcare 31.3% Consumer Healthcare 27.0% Euro HCIT 10.4% Euro HCIT 7.3% MEDIAN EBITDA MARGIN (2016E) MEDIAN EBITDA GROWTH ( E) Clinical / Administrative 28.3% Clinical / Administrative 39.4% Payer-Focused 29.3% Payer-Focused 17.1% Pharma 19.4% Pharma 36.0% Consumer Healthcare 26.4% Consumer Healthcare (2.0%) Euro HCIT 24.6% Euro HCIT 21.5% MEDIAN CAPEX / REVENUE (2016E) MEDIAN TEV / 2016E EBITDA Clinical / Administrative 4.7% Clinical / Administrative 11.4x Payer-Focused 3.3% Payer-Focused 13.4x Pharma 3.3% Pharma 17.3x Consumer Healthcare 4.5% Consumer Healthcare 14.3x Euro HCIT 6.2% Euro HCIT 11.1x HISTORICAL STOCK PERFORMANCE (JUNE 23, 2011 JUNE 23, 2016) Clinical & Administrative Payer-Focused Pharma Consumer Healthcare Euro HCIT S&P 500 PAGE 4

6 PUBLIC COMPARABLES VALUATION AND OPERATING METRICS As of June 23, 2016 ($ in Millions, except per share amounts) EMR Stock Performance Current % of LTM TEV / EBITDA Mkt Cap TEV Price LTM High Revenue % Growth EBITDA Margin LTM 2016 Clinical / Administrative Cerner Corporation $19,233 $19,770 $ % $4, % $1, % 14.1x 11.8x athenahealth, Inc. 5,215 5, % % % 40.5x 22.8x Allscripts Healthcare Solutions, Inc. 2,363 2, % 1, % % 14.0x 10.2x Quality Systems, Inc % % % 10.8x 8.9x Computer Programs and Systems, Inc % % % 17.6x 8.4x RCM / Performance Median $2,363 $2, % $ % $ % 14.1x 10.2x Nuance Communications, Inc. $4,532 $6,783 $ % $1, % $ % 17.7x 9.7x Premier Inc. 4,374 4, % 1, % % 12.6x 9.5x Press Ganey Holdings, Inc. 2,038 2, % % % 20.5x 15.8x Cotiviti Holdings, Inc. 1,751 2, % NA NA NA NA NA 11.4x Advisory Board Company 1,466 1, % % % 14.0x 10.5x Evolent Health Inc % 146 NA NA NA NA NM Other Administrative Median $1,894 $2, % $ % $ % 15.8x 10.5x Omnicell, Inc. $1,204 $1,372 $ % $ % $ % 18.7x 12.8x HealthStream, Inc % % % 22.5x 18.0x Imprivata, Inc % % (18) (14.0%) NM NM Vocera Communications, Inc % % (13) (12.1%) NM 127.1x Median $592 $ % $ % $9 0.8% 20.6x 18.0x Clinical / Administrative Median $1,466 $1, % $ % $ % 17.6x 11.4x Payer-Focused Inovalon Holdings, Inc. $2,717 $2,242 $ % $ % $ % 17.3x 13.1x HMS Holdings Corp. 1,547 1, % % % 15.1x 13.8x Payer-Focused Median $2,132 $1, % $ % $ % 16.2x 13.4x Pharma Quintiles Transnational Holdings, Inc. $7,781 $9,525 $ % $5, % $ % 11.2x 10.7x Veeva Systems Inc 4,718 4, % % % 51.0x 33.3x PAREXEL International Corporation 3,200 3, % 2, % % 10.2x 9.5x Medidata Solutions, Inc. 2,665 2, % % % 58.3x 23.9x Pharma Median $3,959 $4, % $1, % $ % 31.1x 17.3x Consumer Healthcare WEX Inc. $3,545 $4,248 $ % $ % $ % 13.7x 13.7x WebMD Health Corp. 2,350 3, % % % 19.7x 14.3x HealthEquity Inc 1,695 1, % % % 38.8x 27.5x Benefitfocus, Inc. 1,165 1, % % (41) (21.0%) NM NM Castlight Health, Inc % % (77) (93.6%) NM NM Consumer Healthcare Median $1,695 $1, % $ % $ % 19.7x 14.3x Euro HCIT CompuGroup Medical SE $2,199 $2,410 $ % $603 (9.4%) $ % 19.8x 16.1x EMIS Group plc % NA NA NA NA NA 11.1x NEXUS AG % % % 13.2x 11.0x Euro HCIT Median $854 $ % $357 (2.5%) $ % 16.5x 11.1x Overall Median $1,751 $2, % $ % $ % 17.5x 12.8x PAGE 5

7 M&A TRANSACTION ACTIVITY Last 12 Months as of June 23, 2016 ($ in Millions) Announced Date Target Acquirer Business Description Pending Company A * Provider of population health management and data analytics solutions. 06/13/16 MedHOK, Inc. The Hearst Corporation Provider of quality and compliance solutions for health plans and accountable care organizations. 05/04/16 DocuTAP, Inc. Warburg Pincus LLC Provider of EMR, practice management, and revenue cycle management software for urgent care. Enterpise Value Implied EV/Revenue Implied EV/EBITDA 05/03/16 IMS Health Holdings, Inc. Quintiles Transnational Holdings Inc. Provider of information, analytics and consulting services to the pharmaceutical and healthcare industries. $13, x 17.7x 04/26/16 Withings SAS Nokia Corporation Provider of digital health and wellness smart devices and applications. $192.3 * * 04/25/16 Verisk Health, Inc. and Veritas Capital MediConnect Global, Inc. Provider of risk assessment and decision analytics services to the global healthcare industry. $820.0 * * 04/14/16 Curaspan Health Group, Inc. Navihealth, Inc. Provider of discharge and care transition solutions for coordinated care. 03/23/16 Netsmart Technologies Inc. GI Partners; Allscripts Healthcare Solutions, Inc. Provider of SaaS-based enterprise software solutions that support integrated, coordinated care delivery. $950.0 * * 02/22/16 Brightree LLC Resmed Corp. Provider of cloud-based business process management software to the post-acute care industry. 02/18/16 Truven Holding Corp. IBM Watson Health Provider of analytic solutions and services for healthcare industry. 02/05/16 CenTrak, Inc. Halma plc Provider of real-time location systems to healthcare facilities. 02/03/16 AlphaImpactRx, Inc. IMS Health Holdings, Inc. Provider of primary research-based insights and analytics solutions to healthcare and life sciences organizations. 01/11/16 Healthline Media Summit Partners LLP Provider of online medically-reviewed health and wellness information for consumers. 12/18/15 Aeneas Buyer Corp. New Mountain Capital Provider of reimbursement analysis and payment integrity solutions. $ x 18.6x $3, x 34.9x $ x * $225.0 * * 12/03/15 Silverlink Communications, LLC Welltok, Inc. Provider of consumer health engagement programs to educate and support healthcare consumers. 11/25/15 Healthland, Inc. Computer Programs & Systems Inc. Provider of healthcare information systems for rural and critical access hospitals. $241.8 * * 11/17/15 PDR Network, LLC PSKW, LLC Provider of behavior-based prescription management programs to the healthcare industry. 11/02/15 MedAssets, Inc. Pamplona Capital Management Provider of technology-enabled performance improvement solutions for providers and payers. $2, x 12.7x 10/30/15 HealthFusion Holdings, Inc. Quality Systems Inc. Provider of web-enabled computing software products and communications services to health care providers. 10/29/15 Aesynt Incorporated Omnicell International, Inc. Provider of pharmacy automation and information management solutions for hospitals and health systems. 10/26/15 Atlas Medical Software Roper Technologies, Inc. Provider of cloud-based clinical connectivity and process integration solutions. 10/26/15 CliniSys Solutions Limited Roper Technologies, Inc. Provider of clinical laboratory information management software solutions (d.b.a. CliniSys). $ x 44.8x $ x 13.8x $48.0 * * $261.1 * * 10/22/15 NextGen, Hospital Solutions QuadraMed Affinity Division Corporation Provider of hospital information systems (formerly Hospital Division, NextGen Healthcare Information Systems). 10/15/15 Benaissance LLC Evolution1, Inc. Provider of SaaS-based financial management system for health benefits administration. $ x * *HW&Co. confidential transaction *Unpublished information PAGE 6

8 M&A TRANSACTION ACTIVITY Last 12 Months as of June 23, 2016 ($ in Millions) Announced Date Target Acquirer Business Description 10/01/15 Empowered Benefits Inc. Aflac Incorporated Provider of SaaS-based private benefits exchange and benefits administration solutions. 09/14/15 CapsuleTech, SAS Qualcomm Life, Inc. Provider of hospital enterprise connectivity and medical device integration solutions. 09/02/15 MedeAnalytics, Inc. Thoma Bravo, LLC Provider of cloud-based healthcare analytics solutions for hospitals, health systems, and health plans. 09/02/15 Optimus EMR, Inc. Yardi Systems, Inc. Provider of clinical content and electronic medical records software solutions for patient care applications. 09/02/15 Rehfeld Partners A/S IMS Health Holdings, Inc. Provider of data maintenance software solutions to the Danish healthcare industry. 08/24/15 Avalere Health LLC Inovalon Holdings, Inc. Provider of healthcare business strategy and public policy advisory solutions. 08/24/15 RSA Medical, LLC Xerox Corporation Provider of medical risk management solutions to the individual health and life insurance industries. Enterpise Value Implied EV/Revenue Implied EV/EBITDA $ x * 08/12/15 Healthcare Insights, LLC Premier Healthcare Solutions, Inc. Provider of financial management software solutions for hospitals and healthcare-related businesses. $69.0 * * 08/06/15 Merge Healthcare Incorporated IBM Corporation Provider of image sharing software solutions that faciliate care coordination for patients and physicians. $1, x 25.4x 08/04/15 CECity.com, Inc. Premier Healthcare Solutions, Inc. Provider of cloud-based performance improvement and cost accounting solutions for healthcare. $400.0 * * 07/22/15 General Medical Applications, Inc. Modernizing Medicine, Inc. Provider of specialty practice electronic health records (EHR) solutions. 07/06/15 Altegra Health, Inc. Change Healthcare Corporation Provider of technology enabled business and consulting solutions to the healthcare industry. $ x * 07/01/15 InferMed Limited Elsevier B.V. Provider of healthcare clinical decision support software solutions. 06/30/15 Precyse Solutions, LLC Pamplona Capital Management 05/20/15 Picis Inc. N. Harris Computer Corporation Provider of health information management (HIM) performance solutions. Provider of health information services for the high-acuity areas of hospitals. 05/11/15 Acclaris, Inc. Extend Health, Inc. Provider of SaaS-based technology and services to support account-based healthcare plans. $140.0 * * 05/11/15 IOD Incorporated HealthPort Incorporated (nka:ciox Health) Provider of medical document conversion and management solutions. 05/04/15 Sentry Data Systems, Inc. ABRY Partners Provider of cost and compliance management solutions for hospitals and clinics. 04/13/15 Phytel, Inc. International Business Machines Corporation Provider of population health management software solutions for delivering coordinated care to their patients. *HW&Co. confidential transaction *Unpublished information PAGE 7

9 PRIVATE PLACEMENT ACTIVITY Last 12 Months as of June 23, 2016 ($ in Millions) Announced Date Target Lead Investor(s) Business Description 05/11/16 Interaction Healthcare Bpifrance, Audacia SAS, Aquitaine Limousin Poitou 05/02/16 WeCounsel Solutions, LLC Point Judith, Longmeadow Capital Partners, CVH Provider of digital communication and e-learning tools to the healthcare and pharmaceutical industries. Provider of telehealth solutions connecting mental health providers to their clients online. Round / Stage Money Raised Raised to Date NA $5.7 $5.7 A $3.5 $4.1 04/15/16 Proteus Digital Health, Inc. Undisclosed Investors Provider of wearable digital wellness and medication adherence solutions. $50.0 $ /13/16 CareDox Inc. Prolog Ventures, TEXO Ventures Provider of care coordination solutions for schools to manage and share medical information. $4.3 $ /13/16 OnShift, Inc. Health Velocity Capital Provider of staff scheduling and labor management software solutions to the post-acute sector. D $18.0 $ /07/16 Livongo Health, Inc. Merck, Cowen Pvt. Inv., Sapphire Ventures 03/31/16 Quartet Health, Inc. GV (formerly Google Ventures) Provider of consumer digital health and diabetes coaching tools. Provider of cloud-based behavioral healthcare collaboration plaform. C $49.5 $84.5 B $45.0 $ /11/16 Connecture, Inc. Francisco Partners Provider of cloud-based consumer shopping, enrollment, and retention platform for health plans. 02/12/16 Vivify Health Inc. UPMC Health System Provider of cloud-based mobile healthcare platform for remote patient monitoring and virtual care. PIPE $50.5 $111.8 B $10.0 $ /09/16 Health Catalyst, LLC Norwest Venture Partners, UPMC Health System Provider of warehousing, analytics, and outcomes improvement solutions to healthcare organizations. $70.0 $ /14/16 Babylon Healthcare Services Limited Investment AB Kinnevik Provider of a mobile appointment scheduling and clinical record access solution. A $25.0 $ /12/16 NantHealth, LLC Return Investors Provider of cloud-based intelligent clinical operating systems for reducing administrative time and tasks. $52.5 $ /08/16 Syapse, Inc. Ascension Ventures Provider of precision medicine software solutions to academic and community healthcare providers. 12/31/15 MonDocteur SAS Lagardere SCA Provider of an online medical consultation platform to the French healthcare market. C $28.0 $39.5 NA $13.0 $ /16/15 WellDoc, Inc. Samsung Ventures, Merck Global Health Innovation Provider of consumer-focused chronic disease management solutions. B $30.3 $ /07/15 Twine Health, Inc. Khosla Ventures Provider of cloud-based medical consultation software. A $6.8 $7.3 12/07/15 Welltok, Inc. Return Investors Provider of healthcare "gaming" and patient engagement solutions. $38.0 $ /09/15 Evariant, inc. The Goldman Sachs Group Provider of SaaS-based CRM and marketing automation software for hospitals and health systems. C NA $ /06/15 Healthiest You Corporation Frontier Capital Provider of personalized online brain-based health programs for employees. PE Growth / Expansion $31.5 $ /14/15 Lyra Health, Inc. Greylock Partners, Venrock Provider of behavioral health analytics and care coordination software. A $35.0 $ /12/15 DrFirst.com, Inc. The Goldman Sachs Group Provider of medication adherance, e-prescribing, and care coordination solutions. PE Growth / Expansion $25.0 $ /03/15 Kyruus, Inc. New Leaf Venture Partners Provider of physician network optimization software solutions. C $37.0 $ /01/15 Modernizing Medicine, Inc. Pentland Group, Summit Partners, Sands Capital Provider of cloud-based specialty-specific electronic medical record systems. $38.0 $ /07/15 PokitDok, Inc. Lemhi Ventures, Inc. Provider of a cloud-based API platform that powers healthcare interoperability. B $39.0 $43.8 PAGE 8

10 PRIVATE PLACEMENT ACTIVITY Last 12 Months as of June 23, 2016 ($ in Millions) Announced Date Target Lead Investor(s) Business Description 08/05/15 Welltok, Inc. EDB Investments, Flare Capital, Georgian Partners Provider of healthcare "gaming" and patient engagement solutions. Round / Stage Money Raised Raised to Date $45.0 $ /03/15 LaunchPoint Corporation Carrick Capital Partners Provides information-centric enterprise services and solutions for healthcare organizations. C $22.6 $ /28/15 Kareo, Inc. Montreux Equity Partners Provider of cloud-based medical office software solutions for small medical practices. $55.4 $ /10/15 Omada Health, Inc. Norwest Venture Partners Provider of online digital health programs for coordinating people at risk for chronic diseases. C $48.7 $ /01/15 3D4Medical Limited Malin Corporation plc Provider of medical, educational, health and fitness applications for patients. Corporate- Backed $16.4 $ /26/15 NantHealth, LLC Allscripts Healthcare Solutions, Inc. Provider of cloud-based intelligent clinical operating systems for reducing administrative time and tasks. $200.0 $ /09/15 Qinec Ltd. Gilde Healthcare Partners Provider of a cloud-based management platform for outpatient care providers. B $9.2 $ /08/15 ClearDATA Networks, Inc. Flare Capital, Heritage Group, HLM Venture Provider of cloud computing platform and information security services to the healthcare industry. C $25.0 $ /06/15 PatientPing Inc. F-Prime Partners, GV Provider of a real time medical notification platform. A $11.3 $11.3 (formerly Google Ventures) PAGE 9

11 IPO ACTIVITY Last 18 Months as of June 23, 2016 ($ in Millions) Enterprise Value Offer Date Issuer Description Raised Offer Date 06/23/16 % Change 05/25/16 Cotiviti Holdings, Inc. Provider of analytics-driven healthcare payment accuracy solutions. 06/04/15 Evolent Health, Inc. Provider of healthcare delivery and payment solutions in the United States. 05/20/15 Press Ganey Holdings, Inc. Provider of patient experience and caregiver performance measurement and advisory solutions. 02/11/15 Inovalon Holdings, Inc. Provider of cloud-based data analytics and data-driven intervention platforms for healthcare payers. 12/11/14 Connecture, Inc. Provider of cloud-based consumer shopping, enrollment, and retention platform for health insurance distribution. $237.5 $2,414.3 $2, % $224.8 $788.5 $ % $255.9 $1,876.6 $2, % $684.8 $4,123.5 $2,193.5 (46.8%) $53.1 $241.4 $111.7 (53.7%) PAGE 10

12 REPRESENTATIVE HW&CO. HEALTHCARE TECHNOLOGY TRANSACTIONS HEALTHCARE IT pending acquisition of a division of a division of a subsidiary of has received a minority investment from has received a minority investment from PAGE 11

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14 HARRIS WILLIAMS & CO. HEALTHCARE IT SOURCES Accenture America's Health Insurance Plans American Medical Association Bloomberg Bureau of Economic Analysis Bureau of Labor Statistics Modern Healthcare S&P Capital IQ Thomson Reuters The Associate Press The Washington Post U.S. Census Bureau Centers for Medicare & Medicaid Services EHR Intelligence Federation of State Medical Boards Healthcare Information and Management Systems Society IMS Health Medical Group Management Association DISCLOSURES Harris Williams & Co. ( is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services. Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business. THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US AT THE ABOVE ADDRESSES OR NUMBERS. The information and views contained in this report were prepared by Harris Williams & Co. ( Harris Williams ). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable, but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams judgment and are subject to change without notice. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams prior written consent. Copyright 2016 Harris Williams & Co., all rights reserved. PAGE 13